Asia Stocks Snap Four-Day Loss on Wen Call for Investment

By Kana Nishizawa -
Jul 11, 2012

Asian stocks rose for the first time
in five days after Premier Wen Jiabao’s call for investment
lifted Chinese railways shares and phone companies. Gains were
limited on concern a global slowdown will hit earnings at
companies from Advantest Corp. (6857) to BHP Billiton Ltd.

“Uncertainty about the outlook for global demand is
weighing on the market,” said Naoki Fujiwara, chief fund
manager at Shinkin Asset Management Co. in Tokyo, which oversees
about $6.3 billion. “Stocks are becoming unattractive, with
U.S. earnings that aren’t so great and with the ongoing Europe
debt concern.”

The MSCI Asia Pacific Index (MXAP) added 0.2 percent to 116.88 as
of 8:09 p.m. in Tokyo, with about five stocks falling for every
four that rose. The measure has lost about 2 percent since July
4 as the U.S. unemployment rate failed to improve and China’s
imports economy grew at about half the pace forecast by
economists.

Stocks in Asia’s benchmark equities gauge are valued at
11.8 times estimated earnings on average, compared with 12.9
times for the Standard & Poor’s 500 Index and 10.7 times for the
Stoxx Europe 600 Index.

BOJ Meeting

Japan’s Nikkei 225 Stock Average dropped 0.1 percent as the
yen rose to a five-week high against the euro before a Bank of
Japan monetary policy decision tomorrow. Trading volume on
Japan’s benchmark index was about 13 percent below the 30-day
intraday average.

BHP (BHP) declined 0.5 percent to A$31.05 in Sydney. Iron-ore
prices may drop to $135 a ton in the third quarter as China buys
less of the material, Citigroup commodity researcher Daniel Hynes said. Prices averaged $139 in the three months through
June, according to The Steel Index Ltd.

Alumina Ltd. (AWC), a maker of the material used to make
aluminum, slumped 4.3 percent to 67.5 Australian cents after
Morgan Stanley said the company won’t pay a dividend this year
because of worsening margins.

Demand Weakens

Semiconductor-related stocks sank in Asia after U.S.-based
Applied Materials Inc. cut its forecast for sales and profit
amid weakening demand from Europe and China. The cut came a day
after Advanced Micro Devices Inc., the second-biggest maker of
processors for personal computers, reported an unexpected drop
in sales.

Advantest slumped 3.3 percent to 1,100 yen in Tokyo.
Renesas Electronics Corp. (6723), a Japanese maker of chips used in
cars and appliances, plunged 7.9 percent to 291 yen.

Chinese railway and phone companies advanced after Premier
Wen, in a statement on the government’s website yesterday,
called for private investment in the industries, along with
spending on public utilities, healthcare and education.
Promoting investment growth is the key now to stabilizing
China’s economic expansion, he said.